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ARCA biopharma(ABIO) - 2024 Q4 - Annual Report
ABIOARCA biopharma(ABIO)2025-03-06 21:02

Financial Performance - The company generated net losses of 83.7millionfromFebruary6,2024(inception)toDecember31,2024,withnetcashusedforoperatingactivitiesamountingto83.7 million from February 6, 2024 (inception) to December 31, 2024, with net cash used for operating activities amounting to 57.8 million[411]. - The company reported total operating expenses of 88.1millionfortheperiodfromFebruary6,2024,toDecember31,2024,withresearchanddevelopmentexpensesaccountingfor88.1 million for the period from February 6, 2024, to December 31, 2024, with research and development expenses accounting for 75.1 million[441]. - The company has not generated any revenue from product sales and does not expect to do so in the foreseeable future[430]. - The company anticipates needing additional financing in the future to support ongoing research and development efforts[448]. - Interest income for the period was 5.9million,whileinterestexpenserelatedtoaconvertiblenotewas5.9 million, while interest expense related to a convertible note was 1.5 million[445]. - Net cash used in operating activities from February 6, 2024, to December 31, 2024, was 57.8million,primarilyduetoanetlossof57.8 million, primarily due to a net loss of 83.7 million[450]. - Net cash used in investing activities during the same period was 330.1million,mainlyattributedtopurchasesofmarketablesecurities[451].−Netcashprovidedbyfinancingactivitieswas330.1 million, mainly attributed to purchases of marketable securities[451]. - Net cash provided by financing activities was 449.5 million, including 228.0millionfromPre−ClosingFinancingand228.0 million from Pre-Closing Financing and 188.7 million from PIPE Financing[452]. Cash and Securities - As of December 31, 2024, the company had cash, cash equivalents, and marketable securities totaling 393.7million,expectedtofundoperationsforatleasttwelvemonths[413].−AsofDecember31,2024,thecompanyhad393.7 million, expected to fund operations for at least twelve months[413]. - As of December 31, 2024, the company had 393.7 million in cash, cash equivalents, and marketable securities[446]. Research and Development - The lead program, ORKA-001, targets IL-23p19 for psoriasis treatment and is designed for subcutaneous injection as infrequently as once or twice a year[414][415]. - The company initiated dosing of healthy volunteers in a Phase 1 trial of ORKA-001 in Q4 2024, with interim pharmacokinetic data expected in H2 2025 and initial efficacy data in psoriasis patients anticipated in H2 2026[416]. - ORKA-002, targeting IL-17A/F, is planned to begin dosing healthy volunteers in a Phase 1 trial in Q3 2025, with initial pharmacokinetic data expected in H1 2026[417]. - The company has a third mAb program, ORKA-003, targeting an undisclosed pathway, with potential for indication expansion beyond psoriasis[420]. - The company expects significant increases in both research and development and general and administrative expenses as it expands its operations[438]. - Research and development expenses included 57.7millionforexternalresearchanddevelopment,primarilyrelatedtoservicesrenderedbyParagon[442].−Thecompanyrecognized57.7 million for external research and development, primarily related to services rendered by Paragon[442]. - The company recognized 13.5 million in development costs related to ORKA-001 as research and development expenses[459]. - The company is responsible for development costs incurred by Paragon, totaling 3.3millionforORKA−002,recognizedasresearchanddevelopmentexpenses[460].−Researchanddevelopmentexpensesareexpensedasincurred,includingcostsforsalaries,overhead,andcontractservices,withsignificantestimatesinvolvedinaccruedbalances[476].MergersandFinancing−ThemergerwithPre−MergerOrukawascompletedonAugust29,2024,resultinginanamechangefromARCAbiopharma,Inc.toOrukaTherapeutics,Inc.[421].−ThePre−ClosingFinancingraisedapproximately3.3 million for ORKA-002, recognized as research and development expenses[460]. - Research and development expenses are expensed as incurred, including costs for salaries, overhead, and contract services, with significant estimates involved in accrued balances[476]. Mergers and Financing - The merger with Pre-Merger Oruka was completed on August 29, 2024, resulting in a name change from ARCA biopharma, Inc. to Oruka Therapeutics, Inc.[421]. - The Pre-Closing Financing raised approximately 275.0 million, with transaction costs of 20.5millionrecordedasareductiontoadditionalpaid−incapital[422].−Themergerwasaccountedforasareverserecapitalization,withPre−MergerOrukadeemedtheaccountingacquirerforfinancialreportingpurposes[426].−Thecompanyraisedapproximately20.5 million recorded as a reduction to additional paid-in capital[422]. - The merger was accounted for as a reverse recapitalization, with Pre-Merger Oruka deemed the accounting acquirer for financial reporting purposes[426]. - The company raised approximately 188.7 million in net proceeds from a PIPE Financing on September 13, 2024, selling 5,600,000 shares of common stock at 23.00pershare[429].−ThecompanyenteredintoaSeriesAPreferredStockandConvertibleNotePurchaseAgreementwithFairmount,issuingaConvertibleNotewithaninitialprincipalamountof23.00 per share[429]. - The company entered into a Series A Preferred Stock and Convertible Note Purchase Agreement with Fairmount, issuing a Convertible Note with an initial principal amount of 25.0 million, accruing interest at 12.0% per annum[470]. - Prior to the merger, the Convertible Note was converted into 2,722,207 shares of Company Common Stock, based on an aggregate principal amount of 25.0millionplusunpaidaccruedinterestof25.0 million plus unpaid accrued interest of 1.5 million[471]. Stock and Compensation - The company executed a 1-for-12 reverse stock split on September 3, 2024, adjusting the share data retrospectively for all periods presented[427]. - Stock-based compensation is measured using the Black-Scholes option-pricing model, with expenses recognized over the requisite service period[477]. - The fair value of Company Common Stock is determined based on the quoted market price following the completion of the merger[478]. - Prior to the merger, common stock valuations were prepared using a hybrid method, including an option pricing method and a probability-weighted expected return method[480]. Contracts and Obligations - The company entered into Option Agreements with Paragon for antibody discovery, with potential milestone payments of up to 12.0millionforclinicaldevelopmentmilestones[455][466].−TotalexpensesrecognizedinconnectionwithservicesprovidedbyParagonandParukaundertheOptionAgreementsamountedto12.0 million for clinical development milestones[455][466]. - Total expenses recognized in connection with services provided by Paragon and Paruka under the Option Agreements amounted to 42.0 million[463]. - The company recorded a 1.5millionmilestonepaymentrelatedtotheachievementofadevelopmentcandidatefortheORKA−001program[459].−Anon−refundablelicensefeeof1.5 million milestone payment related to the achievement of a development candidate for the ORKA-001 program[459]. - A non-refundable license fee of 150,000 was paid to WuXi Biologics under the Cell Line License Agreement, recognized as a research and development expense[468]. - The company has exclusive licenses for ORKA-001 and ORKA-002, with royalty obligations including a low single-digit percentage for antibody products[465][466]. - The company has contractual obligations for minimum lease payments under its operating lease for headquarters in Menlo Park, California[473]. Miscellaneous - As of December 31, 2024, there is no note payable to a related party[471]. - As of December 31, 2024, the company did not have any off-balance sheet arrangements[483]. - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures[484].